The Swiss National Bank (SNB) reported a record-high profit of 59 billion francs in the first quarter, primarily due to the weakening of the franc. However, this may not lead to a profit distribution to the state at the end of the year as SNB’s assets are mainly foreign currency investments and a weaker franc increases profits when converted back to francs. Additionally, the SNB lost money on bonds due to increased yields on American government bonds.
While this quarterly profit is impressive, it is important to note that it will be determined by SNB’s annual results. In order for any distribution to be possible, SNB must generate a profit of 65 billion francs for the year. Given the uncertainties in financial markets and potential for the franc to appreciate again over time, it is unlikely that SNB will reach these necessary profit levels for a distribution to occur.
Therefore, financial politicians are advised not to budget for SNB distributions and instead consider savings in other areas such as public administration wages which saw an increase compared to national average. The unpredictable nature of financial markets and size of SNB’s balance sheet mean that even small price corrections can have major consequences on profits. It is best for all parties involved to remain cautious about future profit distributions.